by Steve Haner

Dominion Energy is likely to miss its Virginia Clean Economy Act targets, and in a decade, the financial penalties of that law will begin to pile up on the company’s ratepayers, a State Corporation Commission (SCC) staff assessment has concluded. 

“…despite building 17.5 gigawatts (“GW”) of solar and 3.4 GW of wind, the Company will not procure sufficient renewable energy credits (“RECs”) to meet the RPS (renewable portfolio standard) requirement starting in 2036. Customers will be paying significant deficiency payments starting in 2036, through the end of the modeling horizon. The total deficiency penalty ratepayers will be responsible for is approximately $5.32 billion…” wrote one staff analyst in publicly filed testimony.

He added elsewhere: “Ultimately, the Company’s ratepayers have no control over whether the Company meets its RPS obligation or not. However, it is the ratepayers, and not the Company, that are penalized through the assessment of deficiency payments when the Company fails to meet the RPS requirement”.

The staff was commenting to the judges and senior staff of the regulatory commission on Dominion’s most recent application for new solar and battery assets that will help it meet the law’s goals. The law orders them to steadily reduce reliance on coal and natural gas generation and eventually eliminate them.  A hearing on the application will start February 17.

This round, Dominion has applied for approval to own or lease about 1.3 gigawatts (nameplate value) of solar assets and 620 megawatt-hours of battery storage. The SCC staff recommends rejecting 17 of the 21 individual projects due to high cost, including the two battery projects. The reasoning mirrors that used by the full commission last year in rejecting similar proposals from the Appalachian Power Company. 

The 2026 General Assembly is in full swing, and several pending bills will increase or complicate the goals Dominion already is likely to miss. Two Republican senators have introduced bills to repeal the full Clean Economy Act or to remove the portion dealing with RPS, renewable energy certificates and those coming deficiency payments.  See Senate Bills 627 and 752, still alive at this point. 

Having looked at Dominion’s long-term projections of cost and energy production, staff concluded that for those 17 projects it would be cheaper for ratepayers if the utility simply bought energy of any sort from within our regional power marketplace and paid the deficiency fine. The fine started out at $45 per megawatt hour but rises annually with inflation. Use of the collective “staff” in the filed documents implies these are consensus opinions. 

“Staff has serious concerns related to the affordability of the Company’s CE-6 (clean energy round 6) Resources, as well as the Company’s RPS Plan in general. In Staff’s opinion, the renewable energy credit (REC) deficiency payment could reasonably be understood to set a price ceiling on the cost of compliance with the annual RPS requirements,” wrote a second analyst in his report to the commission. 

“Staff’s position is that if the cost to comply with the RPS requirement exceeds the REC deficiency payment, then the additional cost premium that this presents to ratepayers raises additional concerns regarding rate affordability.

“Should the Commission approve these resources, the Company still projects Io be unable Io meet the RPS requirements beginning in 2036. Based on these projections, ratepayers will be responsible for paying for uneconomic resources as well as deficiency payments of at least $5.3 billion by 2045.”

Under the Clean Economy Act, by 2036 Dominion is supposed to provide 63% of its non-nuclear energy from sources that do not emit carbon dioxide.  That would include its own renewable generation or purchased RECs. Failing that, the deficiency payment (fine) kicks in, and Dominion’s own data predicts it will. The surging demand for electricity in its territory serves to make that goal harder to achieve. 

The deficiency payments will be in addition to the cost of the renewable energy RECs the utility is able to generate or obtain, multiple billions of dollars of additional consumer payments that produce no actual electricity.

In its arguments that the projects are economically beneficial, Dominion relied in part on an assumed “social cost of carbon,” a dollars-per-ton of emitted CO2 amount that is claimed to represent the damage to the environment or people’s health. The figure commonly used is a federal estimate of $51 per ton that dates to the Biden Administration. There is no Virginia-specific social cost of carbon (SCOC) set by the SCC. 

The staff is encouraging the commission to discount it when looking at the cost and benefit argument over these projects. 

“While Code § 56-585.1 A 6 requires the Commission to consider the SCOC, it does not state how the SCOC should be weighed… The vast majority of the impacts of the SCOC will fall outside of the Commonwealth and the United States, i.e., SCOC will largely impact the rest of the world.

“Staff believes that, when considering the SCOC, the Commission should take into account that the vast majority of the SCOC benefits will be realized outside of the Company’s service territory, and not by the Company’s ratepayers. Specifically, the Company’s ratepayers shoulder the burden of the cost of reducing the Company’s carbon emissions, but do not see a symmetrical benefit”.

The analysts also note that the RPS-compliant assets the company already has are often unable to feed into the grid and serve customers because of transmission constraints. If less power reaches the grid, Dominion also earns fewer RPS compliance RECs and thus must buy more of them from outside.

“The Company’s resources are also facing increasing levels of congestion and curtailments that bring down the total contribution of energy and RECs provided by these resources….it appears that current and future resources will continue to interconnect to an already congested transmission system, increasing both the congestion and curtailment problem that negatively impacts the existing solar resources and increases the congestion charges paid by ratepayer… The Company’s (clean energy) projects were curtailed 3.45% in 2024 and 4.57% so far in 2025”.  

The evidence that the Clean Economy Act will not work and will be a major financial burden on ratepayers and our economy continues to accumulate. It does not appear 2026 will bring a change of direction.